Considering the huge hit the Baltic Dry Index has taken over the past year, and the amount of existing tonnage in the market, this move is not surprising.

Scorpio says two of these new LR1s will delivered from an undisclosed South Korean yard within the second quarter of 2017 and one within the third quarter of 2017.

As a result of this order change, Scorpio will incur a loss of approximately $22 million relating to writing down the contracts to their estimated fair market value.

Due to the fact Scorpio Bulkers is a dry bulk shipping company, these LR1 newbuilds will now be listed on the company’s balance sheet as assets held for sale and if the newbuild contracts are sold for their current market value, Scorpio Bulkers says the estimated future cash obligations will be reduced by approximately $60 million.

Scorpio Tankers has said they will not purchase the LR1s and Scorpio Bulkers notes there are no plans for any further contract conversions.